The Revitalization of Rolling Hills/Southside: How the Redevelopment of One of Durham’s Struggling Neighborhoods Impacts the City

Mention the words “Rolling Hills” and “Southside” around Durham, North Carolina and one is sure to receive a range of emotional responses regarding the neighborhoods’ pasts, presents, and futures. Rolling Hills is a 20-acre site with great views of downtown Durham and the potential to be the beautiful neighborhood its name evokes. However, the area as it stands today is filled with vacant lots, debris, and decay due to years of mismanagement. Adjacent to Rolling Hills is Southside, a 100-acre neighborhood that, too, has seen better days. Rolling Hills/Southside is situated within the Hayti district in Durham, a once thriving and historically black neighborhood that has fallen into long decline largely in part due to the demolition of much of Hayti’s business district and oldest residential neighborhoods in order to create the Durham Freeway in the 1960s (1). The area is located along East Lakewood Avenue and Roxboro Street and is between downtown Durham and NC Central University. Sites in the Rolling Hills/Southside region have further degraded after several failed attempts at developing the area, one in the 1980s and another in the 1990s (2). Now, fewer than 10 residents remain in Rolling Hills, where houses are boarded up and have begun to fall apart, and crime and the drug trade has thrived (3). As quoted by a Southside resident, Southside is “one of the most violent, drug-impacted areas of the city, for its size” (4).

Southside is also an area with high rental housing levels. A 2009 survey found that fewer than 13% of the neighborhood’s homes and apartments are owner-occupied (3). Furthermore, disinvestment in the area has accelerated in past decades and today “Southside has one of Durham’s highest concentrations of vacant lots and vacant homes and one of the lowest homeownership rates” (5). According to Neighborhood Scout, the Rolling Hills/Southside neighborhood, defined around South Roxboro Street and South Mangum Street, has a median housing value of $76,323, and 48% of houses are in the $0-$47,000 range. The area largely is comprised of renters and has an education level rating of 1 (5 is average for the US, 10 is most educated). Furthermore, this part of Durham is classified as among the 15% lowest income communities in the US and is made up of mostly black residents (7). In the past decade and a half, the City of Durham has spent approximately $5 million buying back almost 50 houses in Rolling Hills, relocating previous residents of the area, and bulldozing decaying homes. Some public housing organizations such as Self-Help have also gotten involved. Between 2006 and 2011, Self- Help purchased 94 properties in Southside. However, most of them are still boarded up awaiting funds for improvement. As Mayor Bill Bell stated in an article featured in The Durham News, “prior to the city’s intervention, Rolling Hills was fast becoming a ghetto hidden in plain sight with no one offering to come in to develop the project at a quality level that was befitting the location” (6).

Figure 1: Map of Rolling Hills/Southside in Relation to Rest of Durham

Durham, like many other cities across the country, suffers from an affordable housing shortage. As Alex Ferreras described in his article “Durham’s Affordable Housing Crisis”, there are “simply too few safe and affordable housing options for too many poor people” (9). This affordable housing shortage has arisen for two reasons: 1) there is not enough affordable public housing in the city caused in large part by a lack of government funding and 2) the private market doesn’t build housing for people with extremely low incomes. The economic recession of the past several years has played a large part in the affordable housing crisis. Large budget cuts in response to the weakened economic state of the United States have reduced federal, state, and local funding for nonprofit organizations and housing authorities who provide public housing to residents. Nonprofits in Durham such as New Hope, CASA, Durham CAARE, and Self-Help Credit Unit continue to attempt to develop more affordable public housing but their efforts are weakened by the minimal funding they receive from the government. Waiting lists for available housing units have continued to grow over the years: the waiting list for one of Durham Housing Authority’s 1,850 units is 1,200 households long, and the Section 8 voucher program is closed with a waiting list of 2,300 (9). The private market does not provide much hope, either. As Ferreras describes in his article, you get what you pay for in the private market. So if you don’t have much money, you don’t get much. Furthermore, when low-income people are able to purchase cheaper housing in the private market, it is often substandard and in disrepair. It is also difficult for private developers to build and maintain low-income housing projects if they do not receive subsidies from the government.

The revitalization of the Rolling Hills/Southside area, which will create affordable housing as well as “upgrade” the area, is a $48 million project. Thus, the source of the project’s funding has been the topic of many discussions. A large portion of the project’s funding comes from grants from the federal government given to the city for housing and urban renewal. Such grants include a $950,000 Neighborhood Stabilization grant from the state of North Carolina for developing low-cost housing in Southside. Furthermore, in October 2012, the Durham Housing Authority received a $300,000 federal planning grant, which will help in expanding and renovating housing in Southeast-Central Durham including the Rolling Hills/Southside neighborhood (9). To help generate even more money for the project, City Council passed a 1 cent property tax increase for Pennies for Housing in summer 2012 which is expected to generate $2.3 million in 2013 for low-income housing and social services for the homeless (9). Additionally, in its budget released in June 2012, the City of Durham included $1 million over five years for rapid rehousing, which will subsidize permanent rentals to homeless people. In August 2011, the City of Durham was granted $1.3 million in tax credits from the N.C. Housing Finance Agency, which it will use in the redevelopment of Rolling Hills/Southside. The N.C. Housing Finance Agency also granted the developer of the project, McCormack Baron Salazar $11 million in tax credits for the first phase of the redevelopment (14).

As described by Major Bill Bell, the goal of redeveloping Rolling Hills/Southside is to create a “high-quality, market-rate mixed-income” housing development in Durham that will attract outside private investment and provide residents with an affordable and hospitable community to live in (6). Additionally, Durham’s Community Development Department has described the city’s objective in revitalizing Rolling Hills/Southside as an initiative to stabilize the area and encourage long-term private investment by creating new, high quality rental and homeownership units that serves a range of incomes (5). The mayor further emphasized that the current revitalization plan for Rolling Hills/Southside is different in design, location, and objectives from past attempts to fix up the area. This time around, the city has employed McCormack Baron Salazar (MBS) which has a national reputation for helping rebuild America’s cities with “quality, first-rate housing developments” and also for managing those developments once they are constructed and occupied (6). As stated by Mayor Bell, “although revitalizing this section of the city will be challenging, the community could finally help Durham draw millions of dollars in future private investment and tax revenue” (3). The Rolling Hills project has many benefits beyond generating more revenue and investment in the area. First and foremost, the revitalization will provide affordable housing: a majority of the occupants of the new housing will be households with incomes below Durham’s median family income (6). Furthermore, many of the housing units are intended to be sold to owner-occupiers in an attempt to promote homeownership in the area, which is mostly renters at present. In an effort to encourage homeownership, the city will dedicate one third of all HOME grant dollars during the first 6 years of the Rolling Hills project to subrecipients in order to “bridge the per-unit gap of almost $64,000 per unit of affordable owner-occupied housing” that is planned to be built in the area (8). Homeownership is important because it can help low-income families increase confidence in their lives and build their futures (3). Homeownership also provides neighborhoods with stability because the residents plan to stay in the community for extended periods of time, and thus these residents have a vested interest in their neighborhoods. Lastly, proponents of the Rolling Hills/Southside revitalization project believe it will be the “tipping point” that will spur further development and revitalization in neighboring areas. As stated in a 2010 Bull City Rising article, it is hoped that the “city’s deep investments in downtown would now be met with a similar turn towards supporting neighborhoods outside the downtown core…[that the Rolling Hills/Southside project will create a] push towards central Durham’s renaissance” (8).

The revitalization project in Rolling Hills/Southside has also attracted the support and influence of Duke University. With the university located only a mile and a half northwest of downtown Durham, Duke has long been invested in the city of Durham. Recently, members of Duke University’s Office of Durham and Regional Affairs have decided to help with the efforts to redevelop the Southside neighborhood. Specifically, Duke has created an initiative that provides loans and incentives that cover up to $50,000 to eligible Duke University and Health System employees to purchase one of the 10 houses that will be built in the initial development of the Southside neighborhood (13). Such incentives include a $10,000 loan, forgiven over 5 years, to Duke employees who have worked continuously at Duke for at least 5 years and have a household income less than 115% of the area median income. Furthermore, Duke plans to waive $2,000 of the loan for each year recipients live in their houses in Southside, in hopes that residents will commit to staying in the neighborhood for at least five years (13). The university will start by recruiting ten families to the area but hopes to expand the program to 25 families in the future. This initiative not only demonstrates Duke’s commitment to the improvement of Durham as a whole, but also provides limited-income employees with the opportunity to become homeowners. The presence of Duke faculty and staff in the Southside community will also have an impact on its revitalization by bringing more income and education into the new housing units.

Although there are many who look forward to the completion of the Rolling Hills/Southside revitalization project after years without progress, there are many who have voiced their criticism of the project and how it will be orchestrated. While gentrification and revitalization of neighborhoods most often results from good intentions, it can also have unintended consequences. Gentrification can revitalize neighborhoods and create nicer communities but often, it raises rents, property taxes and property values which may displace low-income communities who are no longer able to afford the housing they previously lived in. Although this is less of an issue in Rolling Hills since most of the lots are unoccupied, some individuals are still worried that the revitalization will not provide enough low-income housing. Furthermore, leaders of affordable housing groups like Genesis Home and Durham Affordable Housing Coalition are concerned that specific and condensed city focus on the troubled Rolling Hills site and adjacent Southside neighborhood would shift funding away from projects in other areas of Durham such as the West End and East Durham. Particularly, some local nonprofits have criticized the City’s decision to dedicate all block grant funds solely to the Rolling Hills/Southside project instead of dividing those funds across a wider geographical region. By concentrating all of its resources on the 120-acre Rolling Hills/Southside site, Durham is “essentially squeezing out all of the other point-funding for one-off housing projects throughout Durham” (8). Members of these organizations have also voiced their disapproval of the funds being spent on the creation of an “in-vogue mixed-income project (though one with a high proportion of low-income units)” instead of solely for low-income units (2). However, there are many who support the revitalization project. As described in a Bull City Rising article, cities such as Durham may get more concrete and focused results by concentrating dollars on a single area than if they spread dollars around multiple locations (8). This article stated that there is good reason to believe that consolidating investment into a single project is the right strategy for cities like Durham looking to improve and innovate.

Regardless of the opinions concerning the revitalization of Rolling Hills/Southside, the project will have valuable impacts on the community and Durham as a whole. Because the Rolling Hills/Southside project has yet to be completed, the following calculations are solely projected effects of the revitalization of the area. The Rolling Hills/Southside redevelopment project is expected to create approximately 80 affordable housing units and 42 market rate housing units in Rolling Hills (9). The affordable housing units will largely be occupied by low-income households with expected annual income of $40,000, which is approximately 80% of Durham’s AMI of $48,689) (15). The market rate housing units will target households with $49,000-$56,000 annual income (~100-115% of Durham’s AMI). Thus, total income flowing into Rolling Hills is projected to be:

In Southside, the city has committed to help Self-Help build or renovate 40 properties to sell to families with low to moderate incomes. In total, Self-Help has purchased 94 properties in Southside since 2006, which it could fix up and sell to families with low to moderate incomes. Assuming, that the average low-to-moderate income family has a $49,000 annual family income, the renovations of housing in this area is projected to bring a total of $4,606,000 into the area as families from out of county move in. These calculations were determined using the following process: 94 housing units x $49,000 annual family income = $4,606,000. Thus, the Rolling Hills/Southside revitalization project will bring approximately $10,032,000.00 into the area.

IMPLAN data for Durham county in 2011, the most recent year data is available for, was used to estimate the impact of the Rolling Hills/Southside revitalization on Durham, NC. As of now, no one lives in the Rolling Hills neighborhood and the housing that will be created is largely targeting individuals who have incomes of approximately 80-90% of the area median income (AMI), or approximately $38,000-44,000. In this study, it is assumed that all new residents who will occupy housing in Rolling Hills/Southside will move to the area from out-of-county residences. To calculate the impact of a change in income, households of the lowest income bracket were used because households in Rolling Hills currently make $0 since the houses are unoccupied. An annual total income change of $10,032,000 was then used to measure the impact of an influx of low-income residents in the Rolling Hills/Southside area. IMPLAN, a software program that analyzes economic impacts on given areas, was then used to generate an impact report . As shown in Table 1, an increase of $10,032,000 in aggregate household income is projected to cause an increase in employment of 77.4, an increase in labor income of $3,444,116.30, an increase in total value added of $5,626,891.10, and an increase in output of $8,985,501.0. Furthermore, an increase in income in Rolling Hills/Southside will have an effect on businesses in the surrounding area. The top ten industries affected by such a change in income are detailed in Table 2 and include education, real estate, and health care. It must be noted that IMPLAN data is not spatially separated. Thus, the figures projected are calculated from a change in income of $10,032,000 in an average location within Durham County. Thus, actual figures representing the Rolling Hills/Southside neighborhood may vary from these projections.

Table 1: Total Impact Summary of $10,032,000Increase in Household Income (in $)

Additionally, the construction, itself, of new housing units in Rolling Hills/Southside, will impact Durham. Although an exact budget outlining the expenses of the Rolling Hills/Southside Project was not determined at the time of this report, the project is expected to have a total cost of $48 million. In August 2011, the City of Durham was granted $1.3 million in tax credits from the N.C. Housing Finance Agency, which it will use in the redevelopment of Rolling Hills/Southside. The N.C. Housing Finance Agency has also granted tax credits to McCormack Baron Salazar which will provide approximately $11 million for the first phase of redevelopment (14). Furthermore, City Council also agreed to terms on a $950,000 Neighborhood Stabilization grant from the state of North Carolina for developing low-cost housing in Southside. These two smaller payments which, together, total almost $2.3 million, were used to calculate the impact of maintenance and repair construction of residential structures on the city of Durham. The $11 million in tax credits were used to calculate the impact of new construction of residential housing on the city of Durham. A single impact report generated through IMPLAN was used to analyze the impacts of both these areas of study. Since these tax credits and grants were obtained because they would be used specifically for the Rolling Hills/Southside redevelopment, they are being treated as new money that the city wouldn’t otherwise have been able to acquire. The results found may be slightly overestimated since the city may have been able to obtain similar grants to fund other housing developments in Durham. Thus, if this money were not used solely on the Rolling Hills/Southside project, the city would use it for another purpose. However, the results may, conversely, be underestimated depending on the exact quantity of funds the city of Durham plans to spend on construction in Rolling Hills/Southside.

Using IMPLAN data for Durham in 2011, an impact report was generated that projects the impact of $13.3 million worth of new construction, maintenance, and repairs on the city of Durham. This report studied an industry change in new construction, maintenance, and repairs. As shown in Table 3, the projected impact on Durham of the construction and maintenance of new housing units and other amenities in Rolling Hills/Southside is an increase in employment of 137.2, an increase in labor income of $7,439,145.40, an increase in total value added of $10,542,598.2, and an increase in output of 18,538,871.9. Furthermore, the construction will impact many industries in Durham such as retail, architectural services, food and beverages services, health care, and real estate among others (Table 4).

Table 3: Total Impact Summary of $13,300,000 in Construction and Maintenance (in $)

Construction of new residential permanent site single- and multi-family structures

75.6

4,391,129.2

5,584,609.8

10,999,999.5

40

Maintenance and repair construction of residential structures

14.0

888,059.5

1,617,031.9

2,310,283.7

361

Imputed rental activity for owner-occupied dwellings

0.0

0.0

258,521.2

390,906.4

319

Wholesale trade businesses

1.3

153,181.8

220,892.9

279,190.5

369

Architectural, engineering, and related services

3.1

207,861.1

211,424.3

360,536.9

354

Monetary authorities and depository credit intermediation activities

0.5

44,533.9

180,297.5

244,506.0

329

Retail Stores – General merchandise

3.7

96,568.7

164,882.3

214,917.4

360

Real estate establishments

1.5

21,760.1

145,856.7

209,781.4

397

Private hospitals

1.7

131,896.7

143,904.1

255,975.3

413

Food services and drinking places

3.2

84,703.7

113,204.4

199,228.8

Although the Rolling Hills/Southside revitalization is expensive and has drawn criticism from concerned parties, the project has the potential to have a tremendous impact on Durham. First and foremost, the project will provide low-income and market rate housing which will bring several hundred families into the area. As estimated above, this will lead to an increase of approximately $10 million dollars in income in the neighborhood. This increase in income will not only impact the residents living in Rolling Hills/Southside, but will also impact employment, labor income, total value added to the economy of Durham, and output in Durham as a whole. The total value added to the economy of Durham is approximately $5.6 million due to such an influx of income alone (Table 1). This change in income also affects a range of sectors varying from education to real estate to wholesale trade. Furthermore, by encouraging more homeownership in the area, the city could also increase consumer spending because when individuals are able to own something as substantial as a house, their overall consumer confidence may increase leading to an increase in consumer spending.

Moreover, the actual construction, maintenance and repairing of housing units in Rolling Hills/Southside will have a substantial, several million dollar impact on the city of Durham, including a total value added to the economy of $10.5 million (Table 3). The construction will affect many sectors of the local economy including hospitals, financial institutions, manufacturing related to construction, and educational institutions, among others. In order to spur revitalization of other areas of Durham, it is important to invest in the Rolling Hills/Southside area because of its key location in relation to downtown, its rich history, and the impact such a revitalization will have on Durham as a whole. The redevelopment of Rolling Hills/Southside and inflow of residents into the area will also have valuable affects on retail centers and other housing complexes nearby. Rolling Hills/Southside is opportunely located adjacent to Heritage Square, a shopping center on Lakewood Avenue, and Fayette Place, a defunct public housing complex intended to be housing and retail shops for NC Central University students. Reinvestment in Rolling Hills/Southside will not only improve the neighborhoods themselves but will also lead to efforts to renovate and strengthen both of these areas adjacent to the neighborhoods. By reinvesting in housing and retail centers in the areas surrounding Rolling Hills/Southside, the city will increase retail spending at these institutions, increase quality of life for its residents, and create more attractive neighborhoods for outside investment.

In addition to creating several hundred housing units in the first two phases of the redevelopment, there is potential for an additional 1,000 units to be created over the next six to eight years “given the catalytic effect it could have on the timing of the Heritage Square project, the redevelopment of Fayette Place and other private investments” (8). As the Rolling Hills/Southside area is improved and quality housing for lower-income families is created, land values in the area will increase and attract outside investment, leading to further improvement of the neighborhood and surrounding areas and continuing Durham’s urban renewal. While costly and controversial, the Rolling Hills/Southside redevelopment is a project the city of Durham should invest in because it will not only provide hundreds of families with housing, but will also increase employment and output in Durham, will have a total value added to the economy of Durham of over $16 million dollars, and will spur urban renewal across other neighborhoods in Durham.